July 2005

Copart faces patent lawsuit

Manheim Services Corp., one of the largest used auto sales companies in the U.S., is suing Copart, Inc. for using their patented auto auction format on their website.

Manheim claims Copart is using technology patented by Manheim to sell salvage vehicles and no consent was sought.

The U.S. District Court in Atlanta received the filing which describes in detail how Copart's online auction technology allegedly infringes on Manheim's patent.

Upon visiting their sites, both appear to use a format similar to eBay's auctions.

Copart sells damaged vehicles, usually for insurance companies and formerly operated live auctions out of it’s 133 nationwide locations. Copart only recently moved to online auctions to take advantage of the widened customer base.

Regarding the lawsuit, Copart issued a press release that states the lawsuit is "without merit" and promised to "vigorously defend its position."

Manheim demands that Copart stop using its online technology and to pay damages.

According to Manheim, it "has been and will continue to be seriously damaged and irreparably injured" by Copart's actions.

Copart made record sales after introducing Virtual Bidding Second Generation, or VB2, in December 2003. Because of the reduced operation costs, Copart's annual revenues topped $400 million for the first time.

The growth in sales and profits, Copart executives have said repeatedly, is due to the popularity of VB2.

The system allows Copart to sell vehicles all over the world, instead of taking bids only in person at the local auctions held at Copart’s various auction sites.

Manheim's auction system is called Simulcast. It allows dealers to bid remotely online and buy vehicles as they are moving through live auction lanes.

Manheim contributed to sales of $3.5 billion worth of vehicles to online buyers since their beginning just two years ago. Last year alone saw over 200,000 cars sold.

The companies claim they were the first to develop their online auction system.


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